Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Friday 07/20/12

Mad If I Found One

Mad if I found one.

That's how a pork producer answered me this week when I asked him what he'd pay for feeder pigs.

Talk about being bearish. Makes the Grinch look like Santa.

Why so extremely glum? I suspect this cantankerous mood has something to do with $8 corn, $530 meal, and fourth quarter lean futures $17 to $20 below the current cash index.

The breakeven math flies past sobering on its way toward heart-stopping. Just consider these ballpark numbers:

As of the July 20 close, hedgable market hog revenue for the final quarter of 2010 is roughly $155 per head. The total cost of producing 225 pounds of pork (i.e., building on your feeder pig freebie) given the expensive feedstuff previously specified will be close to $200.

The unbelievable bottom line is a negative $45 per head. Please pay the cashier at the door and beware of strangers bearing gifts.

So don't for a second doubt that pork producers have slammed into liquidation gear. Although I haven't yet any stories about babies tossed out with the bath water (i.e., bred gilts taken to town), several sow killers have told me that slaughter numbers are beginning to stack-up.



Posted at 3:21PM CDT 07/20/12 by John Harrington
Comments (2)
What is amazing to me is the short-sightedness of the National Corn Growers Association. Their members sat behind a member of one of the meat group members (National Cattlemen?) who was testifying before Congress, and afterwords stated that the RFS shouldn't be changed, and this was no time for there to be bickering in agriculture. Pretty darn easy to say when your industry is insured. Don't get me wrong...the mandate won't be overturned. Too many hoops to jump through on that. Could it be tweeked, should it be tweeked...sure. But it won't. That is reality. But at the VERY LEAST, the Corn Growers should have just a little bit of empathy. Afterall, livestock is their second biggest customer. The last time I looked, you wanted your customers to make money, and not patronize them and treat them with disdain. Corn Growers, it will all come around full circle, you can be sure of it.
Posted by BRANDON BUTLER at 7:33PM CDT 07/20/12
I'm simply going to reiterate the Comment I made on Chris's posting, as it pretty likely applies here as well. I have followed the Bank Scandal until it morphed into a Rate-Fixing, Derivatives and Commodities Scandal. Lurking behind the whole argument on "Climate Change", as well as other controversial issues is what's going on in the Global Bank, Investment and COMMODITIES Markets, all of which are the resources for the "Major Players" in Commodity Ag. They have to be getting a little nervous, as "We The People" are discovering from "wage slave" to Municipality, our entire Monetary System is built on sand of the quickened persuasion. What does this have to do with the Farm Bill and Ag? Everything. Like our entire US Economy, the "brick" house we thought was there, turns out to be a house of cards. Like many of the rest of us, Farmers of every persuasion stand to be "Collateral Damage" along with the rest of us. If 75% of American Municipalities are being rear-ended, where does that leave the Small, Medium and Legacy Farmers? In a drought of a financial nature, the likes we may have never seen before.
Posted by Ric Ohge at 11:08AM CDT 07/23/12
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